New house price growth cycle to begin in Q3 of 2016: REIDIN

The historical correlation between real estate transactions volume and housing price index says of the imminent start of a new cycle in Dubai housing prices growth.

The in-depth study of various processes taking place in the Dubai housing market helped REIDIN experts discover that real estate transactions volume recorded by DLD every year has a direct impact on a price index in the delayed term. What does it mean?

Having compared the level of buying activity and the level of property prices growth over the last five years analysts saw that one of the indicators’ levelling off invariably causes the upturn of the other curve (i.e, price index curve) with a time lag of about six months.

Throughout 2016 a number of registered residential transactions in Dubai has been increasing steadily, with the exception, perhaps, for the summer months and Ramadan, when any economic and buying activity traditionally reduces in the emirate. Meanwhile, the average (which is important) price growth index remained unchanged still indicating its inevitable upturn in the closest future, when taking to account the statistical six-month correlation delay between these indicators’ changes.

Thus, the beginning of a new cycle in the Dubai’s property market and related price increase can be expected in the middle of the third quarter of 2016, i.e. in the beginning of September, possibly, immediately after the end of the industry’s main event, the Cityscape Global 2016.

The same is indicated by a fewer than expected number of new homes coming to the market. According to Asteco, no more than 3000 new units is being introduced to property buyers currently in Dubai, and it’s unlikely that this figure will reach 20,000 new units predicted to be completed by the end of the year.

Also, three other factors — economic, oil and supply/demand factor, analyzed by other experts point out that the rise in Dubai house prices is literally ‘inevitable’ in the short term, as real estate is going to get into ‘scarce commodity’ category, especially high-quality luxury properties.